Mr Najib made his claims in response to revelations on Tuesday in Fairfax Media that people in his office were allegedly involved in improper dealings with an Australian bank-note company. The company, Securency, is accused of bribing Malaysian officials to win contracts.

Mr Najib has described the reports as "baseless smears and insinuations" and ordered his lawyers on Wednesday to "take all action possible" against Fairfax Media over the reports.

Fairfax reported that allegedly corrupt Malaysian middle men linked to Mr Najib and former prime minister Abdullah Badawi attempted to extract payments from one of two Australian bank-note firms in return for obtaining political backing for their polymer note-printing technology.

In denying the Prime Minister was involved in any wrongdoing, a spokesman for Mr Najib said the reports were "a desperate attempt to link the work he [Mr Najib] did when Deputy Prime Minister – which involved countless trade missions to promote Malaysia abroad, and meeting many thousands of people – with the alleged wrongdoings of middlemen who may have happened to have been in the same room as him at some time or another".

The two Australian Reserve Bank firms involved in the scandal were seeking to win contracts in Malaysia.

Several officers of the two firms face bribery charges in the Victorian Supreme Court. No politicians are alleged in the case to have received bribes.

The Fairfax report comes at an acutely sensitive time for Mr Najib, who is defending himself against a barrage of corruption allegations as well as vicious public attacks by the former strongman leader Dr Mahathir.

The feud between Mr Najib and his former patron has gripped the nation and de-stabilised UMNO coalition, which has ruled the country since 1957.

Mr Najib's press secretary, Tengku Sariffuddin, said the Fairfax report had conspicuously failed to mention Dr Mahathir, even though he had been prime minister during a period when bribes were alleged to have been paid by the Australian firms, and his name had appeared below Mr Najib's in a Victorian Supreme Court suppression order, which was lifted this week.

"Fairfax Media chose not to mention Tun Mahathir anywhere in its article," wrote Mr Tengku, in a letter to Fairfax which he also posted on the Prime Minister's Office Facebook page.

"It may not be coincidental that Fairfax Media claims to have separate information from 'high-level sources'," he said. 

                                                                                                                                                         How The Age broke the story

Mr Najib and his representatives have also blamed Dr Mahathir for a damaging Wall Street Journal report that nearly $US700 million ($942 million) was diverted from a sovereign wealth fund, 1MDB, into a bank account in Mr Najib's name.

Mr Najib denied any of the funds were for his personal use and instructed lawyers  "to immediately exhaust legal avenues and remedies". This week, however, the lawyers concluded that the article was "neither here or there".

Opposition MP Nurul Izzah Anwar, eldest daughter of jailed Opposition Leader Anwar Ibrahim, told Fairfax Media that she is working on a legal challenge to the 2013 election results on grounds that Mr Najib's campaign was part-funded by embezzled money.

Despite her deep familiarity with Malaysian politics, however, she said she had been "shocked" by the report, and the extent of efforts to suppress information in Australia, because it showed how deeply ingrained Malaysia's problems had become.

"We're seeing the unravelling of a corrupt government. People are feeling overwhelmed," she said.

"In great rapid succession you see so many things being unearthed. It gives new meaning and new depth to an entrenched and systemic problem of corruption."